M/S. Graphite India Ltd. Vs Union of India and Ors.

2.	The pet	itioner m	ade	an a	pplication	for Value	Based
Advance	Licence	in the	mont	h of	March,	1995 for	import
of	Electrode	Grade	Ca	lcined	Petroleum	Coke,	Special
Impregnatin	g Pitch	and	Coal	Tar	Pitch.	The	petitioner
was	granted	licence	for	import	of	the aforesaid	items
duty	free	against	t	he	export	of	Graphite
Electrode/N	ipples.	The	pe	titioner	was	also issued	a
Duty	Exemption	Entitlement	Ce	rtificate	(DEE	C book).	The
petitioner	claims	to	have		complete	d 100%	export
obligation	between	May,	199	5	and	November,	1995.

¶13

2

¶14

Admittedly,	no imports were made b	y the	petitioner
against	the said licence and the licen	ce got expired	on
28th	March, 1996. Initially, by the	order dated	8th
February,	1999, the application for	revalidation	of
licence	was dismissed, but on su	bsequent ap	plication,
the	licence was revalidated upto 26th	February,	2002.
The	petitioner claims to have imported	the	aforesaid
material	during September/December, 2001.	The	imports
were	made at the international rates	prevalent	during
this	period. There appears to be no	dispute and	rather
it i	s admitted case of the petitioner	that the	rates
during	the period of import (Septemb	er/December,	2001)
were	much lower than the rate prevailing	at the tim	e of
the	submission of the application.	The	petitioner
requested	the Customs authorities for audit	of DEEC	book
in resp	ect of the Advance licence dated	29th March,	2005
issued t	o him. The audit of DEEC book	has not been	done
by t	he Customs Authorities. At the	same time,	the
petitioner	has been issued a show cause	notice dated	6th
July,	2005 by the Office of the Joint	Director	General
of	Foreign Trade under Section 11 for	violation of	the
provisions	of the Foreign Trade	(Development	and
Regulation) the	Act, 1992 on the basis of Customs Authorities as the variation	the information between	by the

¶15

price declared to the Licensing Authority and the price

¶16

declared at the time of import exceeded 20%.

¶17

3

¶18

By means of this writ petition, the petitioner seeks to challenge the show cause notice dated 6th July, 2005 issued by the Joint Director General of Foreign Trade. The petitioner also prays for issuance of writ of mandamus to the respondent no.4 directing him to log in

¶19

and audit the DEEC book pertaining to post Advance

¶20

Licence dated 29th March, 2005.

¶21

In opposition to the writ petition, reply affidavit has been filed by the Joint Director General of Foreign

¶22

Trade as well as by the Commissioner of Customs (Exports).

¶23

5.	In his	affidavit,	the	res	pondent	no.4	h	as	stated
that in	so far as	the	im	port	of	Electrode	Gr	ade	Calcined
Petroleum	Coke/Pitch	Cok	e	by		the	petiti	oner	is
concerned,	in terms	of	val	ue,	the	variation	is		21.48%.
As	regards the	import	of	sp	ecial	Impregna	ting	Pitch	and
Coal tar	pitch by	the	petiti	oner,	in	terms	of	value	, the
variation	is 56.62%.		In	terms	of	the	qu	antity	the
variation,	according	to	th	e re	sponde	nt	no.4,		exceeds
75%.	The respond	ent	no.4	has		stated	that	as	the
variation	in the	price	was	more	than	20%	bet	ween	the
price	declared b	efore	the	Lic	ensing	Author	ity	and	price

¶24

declared at the time of actual import, the DEEC book

¶25

could not be audited.

¶26

4

¶27

6. Having	he	ard	Mr.Vikra	m Nankani, the	lear	ned	counsel
for the p	etitioner		and Mr	.A.S.Rao, the le	arned		counsel
for the respon	dents,	we	are o	f the view that	in	so	far
as the iss	uance	of	notice	dated 6th July,	2005	by	the
Joint Director		Gene	ral of	Foreign Trade	is	co	ncerned,
the same does	not	dese	rve to	be quashed at	this	stag	e as
issuance of	that	not	ice cann	ot be said to	be		without
jurisdiction. T	he	defen	ce the	petitioner has,	has	to	be
shown in resp	onse	to	the sa	id show cause	notice	to	the
Joint Director Ge	neral	of	Foreign	Trade. As	a	matter	of
fact, Mr.Vikram		Nan	kani, the	learned counsel		for	the
petitioner did	not	pu	rsue the	matter further	in	so	far
as the quashing	of	th	e show	cause notice	dated	6th	July,
2005 was	concerne	d.	His	main thrust of	argu	ment	was
that the respon	dent	no	.4, des	pite number of	re	minders	by
the petitioner,	has		not be	en auditing/logging	the		DEEC

¶28

book. He referred to the various letters written by the

¶29

petitioner to the respondent no.4.

¶30

7.	It does	appea	r from	the	availa	ble mate	rial	that	the
petitioner	has	been	writing	to	the	respondent	no	.4	to
complete	auditing	and	logging	the	DEEC	book	so	that	the

¶31

petitioner could submit the same before Director General

¶32

of Foreign Trade.

¶33

On 2nd March, 2005, the petitioner made the

¶34

following representation to the respondent no.4:

¶35

5

¶36

"GIL.EXP:2005 March 2, 2005 Mr.N.K.Bhujbal, Commissioner of Customs (Export), Jawahar Customs House, Nhava Sheva Sir,

¶37

Re: Audit of DEEC Book No.160459 Adv.Lic.No.0300400 dt.29.03.95.

¶38

This	is furthe	r to our letter	No.GIL	:EXP:2005
dt.Jan.20.	2005 and	the personal intervie	w	we
had much for our interv	with you on the courtesy extended to iew.	24.02.05. We thank us during	you	very
At attention	the outset to c	we wish to draw ircular No.23/96 Cus.	your	kind dated
19/4/96 contents that -	(copy e of the circular, it is very	nclosed.. Annex-1). clear	Fro	m the
a.	The Govt.	has envisaged	that	there
	would be	cases where the		variation
	between the	price declared	to	the
	Licensing at the time of actual im 20%.	Authority and pri port may exceed	ce	declared
b.	In such	cases, the circular		envisages
	that the	importer must be	given	an
	opportunity	to substantiate		such
	valuation an	d justify that	the	CIF
	prices decl	ared in the		application
	before the then prevailing prices.	the Licensing authorities international		were
Thus,	what is	required to be establi	shed	is
that	the dec	lared application rates	were	not
substantia prevailing	lly different than the international prices.	then

¶39

As explained to you on 24/2/05, we wish to bring to your notice the following:

¶40

i. There	has	been	a huge	time lag	between
the	licence		application	date	(March
1995)	and	the	period	of actual	imports

¶41

6

¶42

	(Sept.	-		Dec.2	001). Y	ou	will
	appreciate	that	6.	1/2	years is	too	long
	a	period		du	ring which		price
	fluctuations percentage	beyond cannot occ	a spec ur.	ified
ii.	The licence was	exten allowed as	sion per Govt.	of laws.	validity	of	the
iii.	Prices demand	did	dro for	p end	due to severe products whic	dip h	in resulted
	in materials. for our final to the fall.	dip products a	in The lso contrib	int uted	ernational prices emerging Chines	for e	raw market
We justifying	are	submi the	tting		herewith the international		proofs prices
prevailing (application materials im	ju date) for ported by us.	st the three . Annex-2	prior raw .		to March		1995

¶43

i. Calcined Petroleum Coke :

¶44

. Certified	xerox copy		of Bills of	Entry
(1 No.) us durin	in respect g February	of 1995	imports made and data	by from
‘International Services’.	Business It wou	ld	Inf be observed	ormation that
the rate	varied betw	een	US$672.69 &	US$
704. Our licence a US$704.35.	pplication rate was

¶45

ii.

¶46

Special Impregnation Pitch:

¶47

. Certified	co	py of Bill	of	Entry (1	No.)
in resp	ect	of imports	made	by us	during
January		1995 and	data	from D	irectorate
General Statistics.		of Comm It wo	ercial uld b	Intelligence e observed	& that
the	rate	varied	from	US$675	to
US$959.61. rate is US$7	Our 58.47.	Licence application

¶48

iii.

¶49

Coal Tar Pitch :

¶50

Data		from	Directorate	Gene	ral	of
Commer	cial		Intelligence	&		Statistics.
It	wou	ld	be observed	that	the	rate
varied		from	US$675 to	US$959.61.		Our
Licence a	pplica	tion rate is	US$797.708.

¶51

7

¶52

A	statement giving	aforesaid	details	is
enclosed	as Annexure-1.	You	will	appreciate
that total value	in the said Value variation between and the total	Based total evidence value	Licence, (ba	the application sed on
lowest and to 9.31%.	highest rates) range between 7.97%
In addition	we are furnishing the following:
1.	Price justification international prices prevalent at the time of actual import.	based	on	the

¶53

.	" " Annex. 3.
2.	Price justification to prove in international prices of product. Here we have shipping bill of 1995 covered Advance Licence with the another shipment to the same during 2001 under same conditions where the prices have gone down by 22.4%. . Annex 4.	the our taken under price terms	decline finished one the of customer and
We justifying	have attempted to furnish you what is required by the	the	proofs aforesaid
circular, understand arrange to submitting t	we hope it would be of the peculiar facts of our log off the DEEC Book for o DGFT.	help case	to and
Should kindly	you require any further inform. We shall be pleased	cla to	rification, submit
the representati hearings, as	same in writing o ons/personal appearances in may be desire/directed by you.	r	through

¶54

Thanking you,

¶55

Yours faithfully, for GRAPHITE INDIA LIMITED Sd/A.CHANDRAN

¶56

DY.MANAGER (EXPORTS)."

¶57

The respondent no.4, though in his reply before this Court, has tried to justify non-logging in DEEC book as, according to him, the variation in the value of the

¶58

8

¶59

import	exceeded	20	%, in our considered view	, he		ou	ght to
have	consid	ered	the representation made			by	the
petitioner		and	passed an appropriate order	the	r	eon.	If
the r	espondent	no.	4 was satisfied by the	reason	s	s	et out
in	the		representation aforenoticed	for			variation,
obviously,	he	wa	s supported to log in the	DEEC		book	so
that	the	pet	itioner could submit the same		b	efore	the
Director	Gen	eral	of Foreign Trade. On	the o	th	er	hand,
if	the r	easons	set out in the representa	tion d		ated	2nd
March,	2005		were not satisfactory and the		l	ogging	in
DEEC	book	coul	d not be done, he should	have		passed	the
order	accordin	gly	and communicated the	same		to	the
petitioner	t	o	enable the petitioner	t	o		pursue
appropriate with law.	remedy in	challeng	ing the same in accordance
10.	For	wh	at we have discussed above,	we		are	satisfied
that the w following o	rit petition rder:	may be	disposed of by the

¶60

The	respondent no.4 s	hall	consider	the
petitioner’s	representation		dated	2nd
March,	2005 and	after	hearing	the
petitioner,	pass an	appr	opriate	order
thereon within	three months from the
date of the recei	pt of this order.

¶61

9

¶62

(ii)

¶63

All	c	ontentions	raised by	the	petitioner
in	the	writ	petition are kept	open	to be
agitated		in	appropriate pro	ceedings	in
case		the	respondent no.4	rejects	the
petition	er’s		representation	dated	2nd
March,	2005	and refuses t	o log in the
DEEC	book.

¶64

Until	the	dispo	sal	of	the rep	resentation
by	the	respo	ndent	no.4	and four	weeks
thereafter		from	the		date of	the
communica	tion	of	the	said	order to	the
petitioner,		the		responde	nt no.3	shall

¶65

not pass final order pursuant to the

¶66

show cause notice dated 6th July, 2005.

¶67

. No costs.

¶68

(R.M. LODHA,J.)

¶69

(J.P. DEVADHAR,J.)

M/S. Graphite India Ltd. v. Union of India and Ors.

Case brief

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M/S. Graphite India Ltd. v. Union of India and Ors.

Case brief

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What the court decided

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